Housing Will Make or Break US Economy

Az becomes the second state in recent years to adopt gold and silver coin as legal tender. Utah was first. And over the years several successful experiments have occurred wherein a city or county issued its own currency. This should come as no surprise to sophisticated investors. while there is considerable historical support for leaning on gold and other precious metals to protect one’s wealth and liquidity, we should always be cognizant of the fact that precious metals are only precious if they perceived that way.
The U.S. dollar has been propped up using artificial means employed by the Federal Reserve and market makers. There is little doubt that the dollar has been under intense pressure arising out of decades of foolhardy economic policies.
By substituting debt for wages, the appearance of a healthy economy has been maintained. But a quick look at the underlying fundamentals by anyone capable of arithmetic reveals an economy in trouble and a society in turmoil.
This is the result of two factors: (1) we lost our manufacturing base to third world countries and (2) we are in a state of self delusion. We fail to account for many economic events and transactions when we compute our Gross Domestic Product. And the latest trend is to replace real economic activity with trading activity from the financial services industry.
The trigger for what is now seen as the coming devaluation of the dollar has been the essential housing component. The administration and congress, and now state legislatures are setting the stage for a crash that does not have any bottom. In 1983 the financial services industry contributed about 16% of U.S. GDP. This was a fair representation of actual productivity in the country arising out of tangible goods and services created by banks and insurance companies. Now the figure is around 48% of GDP.
The tell-tale sign is that financial service “revenues” and “profits are going up while median come and household wealth has been declining. The extra 32% of GDP does not come from traditional bank intermediation as a payment service, with hedging and other tools to mimicked risk on the purchase of goods and services. It isn’t fees that have increased the apparent increase of the illusion of economic activity from Wall Street and insurance companies. It is proprietary trading profits claimed by the banks and insurance premiums that are artificially inflated by insertion of both banks and insurance companies into economic activity (such as medical care) into commerce that is essentially utility in nature.
The proprietary profits claimed by the banks were predicted here in 2007-2008 and resulted in a projection of a stock market crash and a prediction of the freezing of the credit markets around the world. It was clear then just as it is clear now that Money was being synthesized by the private sector which only means that banks and insurance companies were in essence printing their own money. The dangers of this predicament were apparent and written about by economists whose credentials far exceed my own.
In plain English the banks were stealing money from the marketplace in off balance sheet transactions. And both the banks and insurance companies have been feeding at the public trough for decades. Thus the sole purpose for the existence of investment banks was turned on its head. They were supposed to create active markets in which liquidity (access to capital) was enhanced; instead they surreptitiously siphoned out the liquidity to off-shore accounts and let the markets collapse when investors stopped buying bogus mortgage bonds issued by non-existent trusts. Like any PONZI scheme the entire marketplace collapsed when investor stopped buying the mortgage backed bonds. The correlation is unmistakable and irrefutable.
The insurance companies have been inserting themselves into markets whey contribute no value like medical services and pharmaceutical products.
The end result is that one-third of our entire economy has been eliminated. Taking into account certain productive activities that are not counted (but should be) the real GDP of the U.S. is around $9 trillion but reported at $14 trillion. Using the same logic I pinpointed in 2007, the DOW is actually worth around 8,000, which is where it will go regardless of any remedial policies put in place.
Throughout the world, which is now heavily if not exclusively monetized, obvious steps are being taken to get out of the dollar and into other currencies or assets. The hyper inflation everyone was worried about a few years back was only delayed. And the economic argument of using the dollar as the world’s reserve currency has not been weaker in recent memory.
Accumulation of gold and fixed assets has been responsible in part for propping up our currency. But for our military strength there would be no basis to refer to the U.S. as a world leader. The remedy is obvious — use the reversal of the PONZI scheme to finance new business, expansion of existing business and job training. If that was adopted as policy we would not face an immediate hit to our GDP, equity indexes, and pentup consumer demand together with actual capacity to consume goods and services without plunging into debt would enable us to create fundamental economic activity that would be the envy of the world.
The banking oligarchy currently running our country has a goal that is the anti thesis of the role of government. The oligarchy has profit and wealth accumulation as its goal. The government is required to assure that the referees stay on the playing field and nobody gets an unfair advantage. Just as separation of church and state protects citizens basic rights under natural, constitutional and statutory law, so too should the separation of the banking industry from the government should be well-guarded, lest the power sought by leaders of church, banking and even military and medical services result in the relinquishment of both our freedoms and our prospects.

Arizona Set To Use Gold & Silver As Currency
http://www.zerohedge.com/news/2013-04-22/arizona-set-use-gold-silver-currency

Where is all that money the banks took? Hiding in Plain Sight

You’ll probably never get to this point in litigation but if you do, you’ll be glad you read this. Obviously there is a lot of talk about where all the money went. Right off the top the banks took some 20%+ off of the money that investors gave them to invest in mortgages. That is $2.6 trillion alone off of the $13 trillion in “mortgages” that were mostly defective or fabricated. Then add their profit from insurance and credit default swaps which might amount to on a nominal basis several times the original $13 trillion invested and we get an idea of how much money is being withheld from world economies including the United States.

The answer is that they are hiding it in plain sight and in conjunction with legitimate investments from many other investors and entities. They are putting it in the stock market, mostly, causing it to rise without reason, and to a lesser extent they are putting it into bonds. If someday someone traces the first dollar in from investors all the way through the convoluted fabricated system of what the banks called securitization and the rest of us know was a PONZI scheme, you’ll find it right in front of you listed in the Wall Street Journal.

And if you Google it, you’ll see that BofA’s security analysts agree that the Dow Jones Average and other equity indexes are not reflecting true economic activity. They didn’t get the memo to shut up and sit down. That is what happens when you are too big to fail — you are also too big to manage, too big to jail and too big to regulate. The complicity of regulators, auditing firms and others in this mess has yet to be determined but it seems likely that there will be suits and prosecutions against the auditing firms for taking management’s word for the data rather than testing it the way any first course in auditing 101 would teach future CPA’s. I do know, because I taught auditing classes when I was getting my MBA.

Where is the money that the bankers siphoned out of our economy? Hiding in plain sight in the equity markets. With societies in chaos and economies in tailspins around the world, somehow the equity indexes are reaching record highs and profits are being recorded that are clearly not conforming to economic activity that in some countries is at a virtual standstill or even declining.

Yet the equity markets supposedly are a measure of future earnings which magically appear, justifying the increase in stock prices. If I stole a few trillion dollars and I needed a place to hide it, I would invest it relentlessly in the equity markets and to a lesser degree into debt instruments.

The increase in the DJIA represents trillions in wealth increase — or it represents a deposit of ill-gotten wealth generated by the Wall Street banks and their co-venturers. With GDP so fragile around the world my conclusion is that economic activity around the world is not reflecting any support for the increase in expectations and increase in stock prices.

The banks cornered the market on money and had to decide where they were going to hide ill-gotten profits that most people don’t understand, know about or care about. The obvious answer was, when they were holding trillions of dollars, where the dollar was in possible jeopardy, was to put the money in equities on a slowly increasing relentless purchase of stocks and bonds.

Stocks are measured in numbers of shares rather than strictly dollar denominated accounts. This allows the holders of equities to sell in any marketplace converting the investment into any currency of their choice, potentially avoiding the negative impact of a sudden devaluation of the type that made George Soros so rich.

Undoubtedly this logic has not escaped other legitimate investors and investment managers. Thus the bull market effects produced by the underlying floor of bankers’ purchases of equities is hidden under an increase in legitimate buying. It is a perfect plan as long as receivers are not appointed over the mega banks and dollars are traced to their origin and destination.

If things seem upside down when you turn on the news, now you know why. It is still hard for people to wrap their head around this proposition. All anecdotal evidence which is now so extensive that it almost qualifies as a scientific survey, points to at least 2/3 of all mortgages being fatally defective as perfected liens, unreported compensation on loans (that the banks say were charged against investors) is present in nearly all loans of every kind where a claim of securitization is present, and bank profits and capital have continued to rise even though as intermediaries, they should be making less money because there is less economic activity in a recession or stagnant economy.

That money in the mega banks is our money — taxpayers, shareholders of insurance companies, shareholders of guarantors and co-obligors, investors who advanced the money the homeowners who put up their homes as collateral on non-existent or defective transactions in which the loan and property were intentionally inflated in value. The extra money in those deals were funneled into off shore accounts and transactions that were never taxed by agreement with the jurisdiction in which the the transactions were cited as taking place even though it all happened in the good old USA. I have seen the document where Bermuda accepted the jurisdiction over the transaction and agreed not to tax it.

Although this is my opinion for general information purposes, I feel comfortable sharing it with the public  because I have enough facts from current events and enough experience from my own past experience on Wall Street to be confident that the above rendition is true. Once again I remind readers that the legal consequence of these practices might vary from state to state and even between judges in the same district. Federal and State courts are likely to treat these presentations differently as well.

And just because you are right, doesn’t mean you can prove it or win. So it is imperative that you consult with an attorney who knows all the facts of your case, is familiar with securitization and is licensed in the jurisdiction in which your property or domicile is located.

Premarkets: Dow defies gravity, S&P nears record
http://money.cnn.com/2013/03/15/investing/premarkets/

Senate “Whale” Report Reveals JP Morgan as a Lying, Scheming Rogue Trader (Quelle Surprise!)
http://www.nakedcapitalism.com/2013/03/senate-whale-report-reveals-jp-morgan-as-a-lying-scheming-rogue-trader-quelle-surprise.html

Goldman partner Barg moves to New York from Asia in new role
http://www.reuters.com/article/2013/03/15/us-goldman-barg-idUSBRE92E0CS20130315

BOA DEATH WATCH: Ironic Twist for Zombie Banks

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CITI and BOA Headed for Extinction

Editor’s Notes and Analysis:  

The bottom line here is that I have yet another prediction and I am just as certain of this as the ones Brad Keiser and I issued in September, 2008. Actually it is the same prediction all over again and for pretty much the same reason. I am not just boasting when I say that every single prediction, description and process I have been writing about has turned out to be dead on right despite the jeers it received when published. I actually have some people running through the books and the more than 3,000 Blog Articles to list those predictions, give you the cite, and describe the outcome.

In, 2007 when the DOW was around 14,000 I predicted that it would crash with a low in the 5,000 range, a rebound and then equilibrium in the 7,000 range. If you don’t want to wait for our article on our predictions and their accuracy, go look it up for yourself right here on this blog. And the reason was that the banks were playing a trick on the market and our society. They were merely the conduit for a financial transaction between investor lenders and the homeowner borrowers. They had forced appraisals into uncharted territory that we won’t see again for at least 30-40 years.

The trick was that they created a paperwork trail that they controlled absolutely, and financial trail of self-dealing that remains hidden to this day. Those deals are now dead branches hanging off of a dead tree. By originating the loans with “bankruptcy remote” vehicles the banks made it appear as though the transaction was set in stone (or rather on paper) and the appearance of the documents was like any other real estate transaction — so even seasoned professionals (at first) didn’t have a clue what was going on).

The paperwork was all about a story of a financial transaction that never happened. With very few exceptions none of the terms, conditions and recitals in the promissory note, mortgage (Deed of Trust), Settlement statement (HUD-1), Good Faith Estimate (GFE) or other disclosures  had any basis in fact. There was no financial transaction between the named parties. Consumers take out loans all the time with the assumption that the originator of the loan is the creditor in the transaction and that they are getting money or value from that originator.

Consumers also assume that the terms of repayment offered to the lender were the same as the terms offered to the borrower. And therefore the consumers assume that if the “Loan” is secured on personal property or real property, that the collector calling them  has every right to demand payment and enforce the repossession of the personal property or the foreclosure of the real property. But this wasn’t the case.

The investor lenders took it as an article of faith that banks with reputations dating back into the 1800’s wold want to keep that reputation intact. In fact the quasi public rating agencies made the same assumption. And everyone assumed that NOBODY would want to make a loan that was required to fail in order for the banks to make the ungodly amounts of money they made.

As we predicted over the last 3 years, the ratings of the big banks that led the way down the securitization rabbit hole, are headed toward junk status. As one article in the New York Times puts it, think about what would happen to your life if your credit rating went from 850 to 600 or lower. The debts of the major banks have now been reduced to near junk status and they are still headed down.

The reason these rating agencies have struck down the ratings is that they too were tricked at the front end when they gave investment grade ratings for pension funds to invest — without such ratings, the pension funds, City operating funds, sovereign wealth funds, were not allowed to make the purchase. So the game was on at the beginning to buy their way into the agencies with fishing trips and other inducements and threats, to get the rating necessary in order to receive money from public and private pension funds and trusts.

Now those rating companies have done what they should have done at the beginning. If they had done the due diligence, the entire scheme would have failed on the front end, and if the appraisers were more strictly regulated under threat of huge penalties and liabilities, the transactions would have failed on the back end.

As stated on these pages for months, these big banks are neither big nor banks. They claimed ownership of loans for the sole purpose of trading an ever widening tree of what were once legitimate hedge products wherein an investor protects themselves as to risk of loss by paying a premium that will reduce the return they’re getting but virtually eliminates the possibility of risk.

With loans, it was a simple proposition. Armed with a Triple A rating from the ratings companies, investment bankers sold loans, bundles and bonds forward when there was nothing to sell. Armed with fraudulent appraisals, documents, and disclosures, originators would offer fictitious loan products that bore no relationship to the loans offered to the lenders.

Now the rating companies have examined the books, records and process of these loans and arrived at the same conclusion we reached in 2008. None of these loans were owned by the banks, none of the obligation was subject to any documentation in favor of the actual lenders, and the “assets” on the books are pure fairy tails because they never owned the loans or the bonds. And because of a rule that allows banks to report markdowns for assets held in the United Stated states, but allows them to ignore the write-downs for “foreign” investments, they are able to lie about the assets nd ignore the incredibly huge liabilities facing these banks.

BOA is  dead man walking masquerading as what was once a bank. It cannot recover. Neither can Citi, and there is a big question mark over JP Morgan Chase. Two Banks are about to fall like the twin towers — BOA and Citi. Besides a total loss for the shareholders and most of the creditors, it will release millions of homes from the threat of foreclosure and allow for recovery of millions of homes that were illegally foreclosed. The rating agencies have realized that the foreclosures were merely a device to mask the loss and throw it onto investor lenders. But the rating agencies understand fully now that the pension fund would be violating law and contract by taking loans already declared in default. So for the lawyers out there — there was an offer, no acceptance (nor any possibility of acceptance), and no consideration for the transaction the banks want to use to pitch the loss onto the investor.

That loss cannot be thrown onto the investors because the deal the investors bought was not executed. They didn’t get a good loan within 90 days. Now when a Judge enters a foreclosure order or judgment, the Judge doesn’t realize that he has opened a can of worms. because the main interest (the loss of real creditors) was just litigated without notice or the ability to appear. And the implication of each such order and judgment is that the loan actually made it into a pool, when there were no pools, there are no pools, and the money the dealers took from the government (a) should have been paid to the investors (b) should have been paid only to the extent of their loss — not a multiple payment when the loan or “pool” failed and (c) and those payments (over leveraged in every case) exceeded the amount of the loan to the borrower or the obligation to the investor.

By entering that order, the Judge is saying to investors that THEY are deadbeats unworthy of due process. By entering that order, the Judge has ruled that contrary to the provisions of the pooling and servicing agreement, prospectus and the Internal revenue Code, he is making a factual and permanent finding that the investor must NOW accept and did accept a defaulted loan that would have been rated below junk.

There is an old expression that applies here. “You can’t pick up one end of the stick without picking up the other.” You can’t screw the homeowner borrowers also without screwing the investors — pension funds etc.. The rating agencies have come to what is a startling conclusion for them — the assets are not real and the liabilities are grossly understated. The rating for these “banks” is about to be cut to junk status or below. Citi and BOA are headed for extinction sometime in the next 6 months (last time we said 6 months it was 6 weeks, when we predicted the fall of the banks, and the order in which they would fall).

So that is the prediction — no matter who is elected to the White House or Congress or legislatures or state law enforcement the banks and the regulators stepped on a rake in 1998 and it is now coming up to bash their head into tiny pieces that more than 7,000 performing and conforming banks are ready and willing to clean up. BOA and Citi are done.

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